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ECB questions Slovenian draft law on c.bank supervision
June 13, 2017 / 3:30 PM / 3 months ago

ECB questions Slovenian draft law on c.bank supervision

LJUBLJANA, June 13 (Reuters) - The European Central Bank has said Slovenia’s draft law that aims to introduce some official supervision over the country’s central bank may not be compatible with EU rules.

A law the Slovenian government drafted in April would allow the country’s Court of Audit to review central bank decisions that lead to the spending of public funds.

According to it, the Court of Audit could review central bank decisions over the past 10 years. Local economists and the media have argued that the bank had demanded the state provide too much capital to help domestic banks to ward off a potential debt crisis in 2013.

“The ECB questions whether a provision allowing for auditing Banka Slovenije’s actions that have taken place during the last ten years is compatible with the principle of legal certainty,” the ECB said in a opinion dated June 12 and published on its website.

It added that the independence of the Bank of Slovenia should be respected not only when it performs tasks related to the European System of Central Banks, of which it is a member, “but also when it performs national tasks”.

In 2013, the previous government had to pour more than 3 billion euros into local banks in order to prevent them from collapsing under a large amount of bad loans.

The central bank says all procedures of the 2013 bank overhaul were in line with legislation, including the decision to annul shares and subordinated bonds in troubled banks.

Last month, the Bank of Slovenia governor Bostjan Jazbec, who also sits on the ECB governing council, urged the government to reconsider its supervision plan, saying it was unprecedented in the euro zone.

The finance ministry, which prepared the draft law, told Reuters it will take the ECB’s opinion into consideration and ask the parliament to do so as well. The Bank of Slovenia was not available for an immediate comment. (Reporting by Marja Novak; Editing by Tom Heneghan)

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